2014 (6) TMI 480 - AT - Customs

Waiver of pre deposit - Penalty u/s 114 - export of Muriate of Potash (MOP) of fertilizer - mis-declaring the goods as OWC (drilling chemical additive) - reconsideration of stay order as per the direction of high court - held that - Prima facie, the goods attempted to be exported were MOP as exhibited by report of two laboratories and other material facts and evidence on record. The offending goods were notified to be prohibited goods Goods defined to be prohibited under section 2 (33) of the Customs Act 1962 were when attempted to be exported, that renders such goods to be confiscated absolutely. Appellant had failed to satisfy the investigation as to whether it had procured OWC from the seller. Two testing laboratories opined against appellant exhibiting the goods attempted to be exported were MOP. While interest of farmers has suffered, Exchequer has also suffered. Added to that, interest of the economy has also suffered. While financial hardship is plea of appellant in one hand, protection of interest of Revenue is of paramount importance on the other. - it may be said that the appellant causing serious prejudice to Revenue making attempt to export MOP, does not appear to unduly suffer by present predeposit order. - appellant to make pre-deposit ₹ 20.00 Lakhs (Rupees twenty lakhs) as against earlier order for making pre-deposit of ₹ 25.00 lakhs - stay granted partly.

Summary

Issues:
1. Stay application pursuant to High Court direction.
2. Attempted export of prohibited goods mis-declared as drilling chemical additive.
3. Financial hardship plea and denial of natural justice.
4. Prima facie case for pre-deposit of penalty.
5. Balancing financial hardship and protection of Revenue's interest.

Analysis:

1. The judgment pertains to a stay application following a High Court direction to reconsider the application afresh. The case involved the attempted export of Muriate of Potash (MOP) mis-declared as a drilling chemical additive, leading to seizure and absolute confiscation. The appellant faced a penalty under the Customs Act, 1962, for smuggling prohibited goods meant for subsidized sale to farmers. The High Court's direction necessitated a fresh review of the stay application.

2. The investigation revealed that the MOP was loaded for export without proper examination, mislabelled as a different product. The appellant failed to provide evidence of purchasing the declared product or its chemical composition. The goods were repacked and exported in violation of DGFT notifications restricting MOP export. The Revenue argued that the appellant's actions aimed at unjust enrichment at the expense of farmers and the exchequer, justifying the penalty and pre-deposit requirement.

3. The appellant contended financial hardship due to the confiscation and sought relief from pre-deposit, alleging denial of natural justice and lack of opportunity for retesting. However, the Revenue emphasized the seriousness of smuggling subsidized goods and the impact on public interest. The Tribunal considered the balance between financial hardship and Revenue's interest, citing legal precedents on the importance of protecting public revenue.

4. After evaluating the evidence, the Tribunal found a prima facie case against the appellant for attempting to export prohibited goods. Citing relevant Customs Act provisions and DGFT notifications, the Tribunal upheld the pre-deposit requirement to safeguard Revenue's interests. The judgment highlighted the need to prevent unjust enrichment and protect public revenue, aligning with legal principles and precedents.

5. Ultimately, the Tribunal directed the appellant to deposit a specified amount within a set timeframe, balancing the financial hardship plea with the necessity to protect Revenue's interests. By considering the gravity of the offense, evidence gathered, and legal precedents, the Tribunal aimed to strike a fair balance between the appellant's circumstances and the public interest, as mandated by the law.